SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS                                         JULY   3,
1995

- ------------------------------------------------------------
- -------------------

  3100 Breckenridge Blvd., Bldg 200
  Duluth, Georgia 30199-0062
  (800) 544-5445

  Smith  Barney Appreciation Fund Inc. (the  "Fund")  is  a
mutual fund which seeks
long-term  appreciation  of  shareholders'  capital  through
investments primarily
in equity securities.

  This  Prospectus sets forth concisely certain information
about the Fund,
including sales charges, distribution and service  fees  and
expenses, that pro-
spective investors will find helpful in making an investment
decision. Invest-
ors  are  encouraged to read this Prospectus  carefully  and
retain it for future
reference.

  Additional information about the Fund is contained  in  a
Statement of Addi-
tional  Information  dated  July  3,  1995,  as  amended  or
supplemented from time to
time,  that is available upon request and without charge  by
calling or writing
the  Fund at the telephone number or address set forth above
or by contacting an
Investments  Representative of PFS  Investments  Inc.  ("PFS
Investments"). The
Statement of Additional Information has been filed with  the
Securities and
Exchange  Commission  (the "SEC")  and  is  incorporated  by
reference into this Pro-
spectus in its entirety.

PFS DISTRIBUTORS
Distributor

SMITH BARNEY MUTUAL FUNDS MANAGEMENT
INC. Investment Adviser and
Administrator

THESE  SECURITIES HAVE NOT BEEN APPROVED OR  DISAPPROVED
BY THE SECURITIES AND
EXCHANGE  COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES
AND  EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE
ACCURACY  OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.



SMITH BARNEY
Appreciation Fund Inc.
TABLE OF CONTENTS
                                           
PROSPECTUS SUMMARY                              3
- ------------------------------------------------FINANCIAL
HIGHLIGHTS                                      9
- ------------------------------------------------INVESTMENT
OBJECTIVE AND MANAGEMENT POLICIES              12
- ------------------------------------------------VALUATION
OF SHARES                                      15
- ------------------------------------------------DIVIDENDS,
DISTRIBUTIONS AND TAXES                        15
- -------------------------------------------------
PURCHASE OF SHARES                             17
- -------------------------------------------------
EXCHANGE PRIVILEGE                             23
- ------------------------------------------------REDEMPTION
OF SHARES                                      24
- -------------------------------------------------
MINIMUM ACCOUNT SIZE                           26
- ------------------------------------------------
PERFORMANCE                                    27
- ------------------------------------------------MANAGEMENT
OF THE FUND                                    27
- ------------------------------------------------
DISTRIBUTOR                                    29
- ------------------------------------------------ADDITIONAL
INFORMATION                                    30
- -------------------------------------------------




    No person has been authorized to give any information
or to
make  any representations in connection with this offering
other
than  those contained in this Prospectus and, if given  or
made,
such  other  information or representations  must  not  be
relied upon
 as   having  been  authorized  by  the  Company  or   the
distributor. This
 Prospectus does not constitute an offer by the Fund or
  the distributor to sell or a solicitation of an offer
  to  buy
any of
the  securities offered hereby in any jurisdiction to  any
person
to  whom it is unlawful to make such offer or solicitation
in such
 jurisdiction.


2


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY

The  following  summary  is qualified  in  its  entirety
by detailed information
appearing  elsewhere in this Prospectus and in the
Statement
of Additional
Information.  Cross  references  in  this  summary  are
to headings in the Prospec-
tus. See "Table of Contents."

INVESTMENT  OBJECTIVE  The Fund is an open-end,
diversified management investment
company whose sole investment objective is to seek long-
term appreciation of
shareholders'  capital  through  investments  primarily
in equity securities. See
"Investment Objective and Management Policies."

ALTERNATIVE  PURCHASE  ARRANGEMENTS  The  Fund  offers
two classes of shares ("Clas-
ses")   to  investors  purchasing  through  PFS
Investments Representatives designed
to  provide  them  with  the  flexibility  of  selecting
an investment best suited to
their  needs--the two classes of shares available are:
Class A                                        shares and
Class
B  shares.  In addition to Class A and Class B  shares,
the
Fund offers Class C
and  Class  Y  shares to investors purchasing through
Smith Barney Inc. ("Smith
Barney"),  a  distributor  of the Fund.  Those  shares
have different sales charges
and other expenses than Class A and Class B shares which
may affect perfor-
mance.

Class A Shares. Class A shares are sold at net asset value
plus an initial
sales  charge  of up to 5.00% and are subject to  an
annual service fee of 0.25%
of  the  average daily net assets of the Class. The
initial sales charge may be
reduced or waived for certain purchases. Purchases of
Class A                                        shares,
which
when  combined with current holdings of Class A shares
equal or exceed $500,000
in  the  aggregate, will be made at net asset value with
no initial sales charge,
but  will  be subject to a contingent deferred sales
charge ("CDSC") of 1.00% on
redemptions   made  within  12  months  of   purchase.
See "Prospectus Summary--Reduced
or No Initial Sales Charge."

 Class  B Shares. Class B shares are offered at net  asset
value subject to a
maximum  CDSC of 5.00% of redemption proceeds, declining
by 1.00% each year
after  the date of purchase to zero. This CDSC may be
waived for certain redemp-
tions.  Class B shares bear an annual service fee  of
0.25% and an annual distri-
bution  fee of 0.75% of the average daily net assets of
the Class. The Class B
shares' distribution fee may cause that Class to have
higher expenses and pay
lower dividends than Class A shares.


3


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY (CONTINUED)


 Class  B  Shares Conversion Feature. Class B shares  will
convert automatically
to  Class A shares, based on relative net asset value,
eight years after the
date of the original purchase. Upon conversion, these
shares will no longer be
subject  to  an  annual distribution  fee.  In  addition,
a certain portion of Class
B shares that have been acquired through the reinvestment
of
dividends and dis-
tributions ("Class B Dividend Shares") will be converted
at that time. See
"Purchase of Shares--Deferred Sales Charge Alternatives."

 In  deciding  which  Class of Fund  shares  to  purchase,
investors should consider
the  following factors, as well as any other relevant
facts and circumstances:

Intended Holding Period. The decision as to which Class of
shares is more
beneficial to an investor depends on the amount and
intended length of his or
her investment. Shareholders who are planning to establish
a program of regular
investment  may  wish to consider Class  A  shares;  as
the investment accumulates
shareholders may qualify for reduced sales charges  and
the shares are subject
to  lower  ongoing expenses over the term of the
investment. As an alternative,
Class B shares are sold without any initial sales charge
so the entire purchase
price  is  immediately invested in the Fund. Any
investment return on these addi-
tional  invested amounts may partially or wholly offset
the higher annual
expenses  of  this Class. Because the Fund's  future
return cannot be predicted,
however,  there can be no assurance that this would  be
the case.

 Reduced  or  No Initial Sales Charge. The  initial  sales
charge on Class A
shares  may  be waived for certain eligible purchasers,
and the entire purchase
price will be immediately invested in the Fund. In
addition, Class A share pur-
chases, which when combined with current holdings of Class
A shares equal or
exceed $500,000 in the aggregate, will be made at net
asset value with no ini-
tial sales charge, but will be subject to a CDSC of 1.00%
on redemptions made
within   12  months  of  purchase.  The  $500,000
aggregate investment may be met by
adding  the purchase to the net asset value of all  Class
A shares held in funds
sponsored by Smith Barney listed under "Exchange
Privilege."
Class A share pur-
chases  may  also  be eligible for a reduced  initial
sales charge. See "Purchase
of  Shares". Because the ongoing expenses of Class A
shares may be lower than
those  for  Class B shares, purchasers eligible to
purchase Class A shares at net
asset  value  or  at a reduced sales charge should
consider doing so.

 PFS  Investments  Representatives may  receive  different
compensation for sell-
ing  each Class of shares. Investors should understand
that the purpose of the

4


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY (CONTINUED)

CDSC  on  the  Class B shares is the same  as  that  of
the initial sales charge on
the Class A shares.

 See "Purchase of Shares" and "Management of the Fund" for
a complete descrip-
tion  of the sales charges and service and distribution
fees for each Class of
shares  and "Valuation of Shares," "Dividends,
Distributions and Taxes" and "Ex-
change  Privilege" for other differences between the
Classes of shares.

PURCHASE  OF  SHARES  Shares may be  purchased  through
PFS Distributors ("PFS"), a
distributor of the Fund. See "Purchase of Shares."

INVESTMENT MINIMUMS Investors in Class A and Class B
shares may open an account
by  making an initial investment of at least $1,000 for
each account, or $250
for  an  individual retirement account ("IRA")  or  a
SelfEmployed Retirement
Plan.  The  initial  investment amount will  be  waived
for accounts establishing a
Systematic  Investment Plan. Subsequent  investments  of
at least $50 may be made
for  both  Classes.  For participants  in  retirement
plans qualified under Section
403(b)(7)  of the Internal Revenue Code of 1986, as
amended (the "Code"), the
minimum  initial  and subsequent investment requirement
for both Classes is $25.
The  minimum  initial and subsequent investment
requirement for both Classes
through  the Systematic Investment Plan described  below
is $50. See "Purchase of
Shares."

SYSTEMATIC  INVESTMENT PLAN The Fund offers  shareholders
a Systematic Investment
Plan  under which they may authorize the automatic
placement of a purchase order
each  month  or quarter for Fund shares in an amount  of
at least $50. See "Pur-
chase of Shares."

REDEMPTION OF SHARES Shares may be redeemed on each day
the New York Stock
Exchange,  Inc. ("NYSE") is open for business. See
"Purchase of Shares" and "Re-
demption of Shares."

MANAGEMENT  OF THE FUND Smith Barney Mutual Funds
Management Inc. (the "Manag-
er")  serves  as the Fund's investment adviser. The
Manager provides investment
advisory  and  management services to  investment
companies affiliated with Smith
Barney.  The Manager is a wholly owned subsidiary  of
Smith Barney Holdings Inc.
("Holdings").  Holdings  is  a wholly  owned  subsidiary
of Travelers Group Inc.
("Travelers"),  a  diversified  financial  services
holding company engaged,
through its subsidiaries, principally in four business


5


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY (CONTINUED)

segments:  Investment Services, Consumer  Finance
Services, Life Insurance Serv-
ices and Property & Casualty Insurance Services. The
Manager also serves as the
Fund's administrator. See "Management of the Fund."

EXCHANGE  PRIVILEGE Shares of a Class may be  exchanged
for shares of the same
Class  of  certain  other funds of the Smith  Barney
Mutual Funds at the respective
net  asset values next determined, plus any applicable
sales charge differen-
tial. See "Exchange Privilege."

VALUATION  OF  SHARES Net asset value of the  Fund  for
the prior day generally is
quoted daily in the financial section of most newspapers
and is also available
from  PFS  Shareholder Services (the "Sub-Transfer
Agent"). See "Valuation of
Shares."

DIVIDENDS  AND  DISTRIBUTIONS Dividends from net
investment income and
distributions  of net realized capital gains,  if  any,
are declared and paid
annually. See "Dividends, Distributions and Taxes."

REINVESTMENT  OF DIVIDENDS Dividends and distributions
paid on shares of a Class
will be reinvested automatically, unless otherwise
specified by an investor, in
additional  shares  of the same Class at current  net
asset
value. Shares acquired
by  dividend  and  distribution reinvestments  will  not
be subject to any sales
charge or CDSC. Class B shares acquired through dividend
and distribution
reinvestments will become eligible for conversion to Class
A shares on a pro-
rata basis. See "Dividends, Distributions and Taxes."

RISK  FACTORS  AND SPECIAL CONSIDERATIONS There  can  be
no assurance that the
Fund's  investment objective will be achieved. The value
of the Fund's
investments will fluctuate in response to changes in
market and economic
conditions, as well as the financial condition and
prospects of issuers in
which  the  Fund  invests. The Fund may  invest  in
foreign securities though
management intends to limit such investments to 10%  of
the Fund's assets.
Foreign  investments may include additional risks
associated with currency
exchange  rates,  less complete financial information
about individual companies,
less   market  liquidity  and  political  instability.
See "Investment Objective and
Management Policies."

6


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY (CONTINUED)


THE  FUND'S EXPENSES The following expense table  lists
the costs and estimated
expenses  that  an  investor will incur either  directly
or indirectly as a
shareholder  of the Fund, based on the maximum sales
charge or maximum CDSC that
may be incurred at the time of purchase or redemption:




CLASS A CLASS B ------------------------------------------
- ----------------------------------

     
SHAREHOLDER TRANSACTION EXPENSES
 Maximum sales charge imposed on purchases
     (as     a     percentage     of     offering
price) 5.00%   None
 Maximum  CDSC  (as  a  percentage  of  original  cost  or
redemption
     proceeds,        whichever        is         lower)
None*   5.00%
- ----------------------------------------------------------
- ------------------
ANNUAL FUND OPERATING EXPENSES
 (as a percentage of offering price)
                       Management
Fees 0.62%   0.62%
                         12b-1
Fees** 0.25%   1.00%
                        Other
Expenses 0.15%   0.18% -----------------------------------
- -----------------------------------------
TOTAL            FUND           OPERATING
EXPENSES
1.02%   1.80% --------------------------------------------
- --------------------------------

*  Purchases  of Class A shares, which when combined  with
current holdings of
    Class  A  shares offered with a sales charge,  equal
or exceed $500,000 in the
    aggregate, will be made at net asset value with no
sales charge, but will be
    subject to a CDSC of 1.00% on redemptions made within
12 months.

** Upon conversion of Class B shares to Class A shares,
such shares will no
   longer be subject to a distribution fee.

The sales charge and CDSC set forth in the above table are
the maximum
charges  imposed on purchases or redemptions of Fund
shares and investors may
actually  pay lower or no charges, depending on  the
amount purchased and, in the
case  of  Class B and certain Class A shares, the length
of time the shares are
held.  See "Purchase of Shares" and "Redemption of
Shares." PFS receives an
annual  12b-1 service fee of 0.25% of the value  of
average daily net assets of
Class A shares. With respect to Class B shares, PFS
receives an annual 12b-1
fee  of  1.00% of the value of average daily net  assets
of that Class, consisting
of  a 0.25% service fee and a 0.75% distribution fee.
"Other
expenses" in the
above table include fees for shareholder services,
custodial fees, legal and
accounting fees, printing costs and registration fees.


7


SMITH BARNEY
Appreciation Fund Inc.

PROSPECTUS SUMMARY (CONTINUED)


  EXAMPLE

The following example is intended to assist an investor in
understanding the
various  costs  that  an  investor in  the  Fund  will
bear directly or indirectly.
The  example  assumes  payment  by  the  Fund  of
operating expenses at the levels set
forth   in  the  table  above.  See  "Purchase  of
Shares," "Redemption of Shares" and
"Management of the Fund."



                                              1 YEAR 3
YEARS 5                                       YEARS 10
YEARS*
- ----------------------------------------------------------
- -------------------
                                             

     
An investor would pay the following expenses
on a $1,000 investment, assuming (1) 5.00% annual return
and (2) redemption at the end of each time period:
  Class A                                       $60
$81
$104     $169
  Class B                                        68
87
107      191 ---------------------------------------------
- --------------------------------
An investor would pay the following expenses
on the same investment, assuming the same
annual return and no redemption:
  Class A                                       $60
$81
$104     $169
  Class B                                        18
57
97      191 ----------------------------------------------
- -------------------------------

*  Ten-year figures assume conversion of Class B  shares
to
Class A shares at the
  end of the eighth year following the date of purchase.
                             
 The  example  also provides a means for the  investor  to
compare expense levels
of   funds  with  different  fee  structures  over
varying investment periods. To
facilitate  such  comparison,  all  funds  are  required
to utilize a 5.00% annual
return  assumption. However, the Fund's actual  return
will vary and may be
greater  or  less  than 5.00%. THIS EXAMPLE  SHOULD  NOT
BE CONSIDERED A REPRESENTA-
TION  OF PAST OR FUTURE EXPENSES AND ACTUAL EXPENSES MAY
BE GREATER OR LESS THAN
THOSE SHOWN ABOVE.

8


SMITH BARNEY
Appreciation Fund Inc.

FINANCIAL HIGHLIGHTS


 The  following information has been audited by Coopers  &
Lybrand L.L.P., inde-
pendent  accountants, whose report thereon  appears  in
the Fund's Annual Report.
The  information set out below should be read in
conjunction with the financial
statements and related notes that also appear in the
Fund's
Annual Report dated
December  31, 1994, which is incorporated by reference
into the Statement of
Additional Information.

FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:



YEAR ENDED:               12/31/94    12/31/93#
12/31/92** 12/31/91 12/31/90
- ----------------------------------------------------------
- ---------------------------
                                     

         
NET ASSET VALUE, BEGIN-
NING OF YEAR                 $11.01       $10.66
$10.26 $8.30        $8.66
- ----------------------------------------------------------
- ---------------------------
INCOME FROM INVESTMENT
OPERATIONS:
      Net investment income         0.16         0.15
                           0.18
0.18        0.23
 Net realized and
   unrealized
   gain/(loss) on
 investments                (0.24)        0.72        0.46
2.05       (0.26) ----------------------------------------
- ---------------------------------------------
TOTAL FROM INVESTMENT
OPERATIONS                  (0.08)        0.87        0.64
2.23       (0.03) ----------------------------------------
- ---------------------------------------------
LESS DISTRIBUTIONS:
 Distributions from net
      investment    income            (0.18)
(0.16) (0.15)  (0.20)      (0.25)
 Distributions from cap-
      ital    gains                   (0.60)
(0.36) (0.09)  (0.07)      (0.08)
- ----------------------------------------------------------
- ---------------------------
TOTAL     DISTRIBUTIONS              (0.78)
(0.52) (0.24)  (0.27)      (0.33)
- ----------------------------------------------------------
- ---------------------------
NET ASSET VALUE, END OF
  YEAR                       $10.15       $11.01
$10.66
$10.26       $8.30
- ----------------------------------------------------------
- ---------------------------
TOTAL     RETURN+                    (0.77)%
8.13% 6.29%      26.94%      (0.27)% ---------------------
- ----------------------------------------------------------
- ------
RATIOS TO AVERAGE NET
  ASSETS/SUPPLEMENTAL
  DATA:
 Net assets, end of year
 (in 000's)            $1,689,268   $1,579,248  $1,712,411
$1,752,884  $1,103,293
 Ratio of expenses to
      average   net   assets            1.02%
1.03%
0.88%       0.80%       0.80%
 Ratio of net income to
      average   net   assets            1.61%
1.35% 1.58%       2.20%       2.90% ----------------------
- ----------------------------------------------------------
- -----
PORTFOLIO    TURNOVER   RATE             52%
52%
21%         19%         30%
- ----------------------------------------------------------
- ---------------------------


**All  shares  in existence prior to November 6,  1992
were designated as Class A
 shares.
+  Total return represents aggregate total return for  the
periods indicated and
   does not reflect any applicable sales charges.
# Per share amounts have been calculated using the monthly
average shares
    method, which more appropriately presents per share
data for this year since
    use  of  the undistributed income method did not
accord with results of opera-
   tions.


9


SMITH BARNEY
Appreciation Fund Inc.

FINANCIAL HIGHLIGHTS (CONTINUED)

FOR A CLASS A SHARE OUTSTANDING THROUGHOUT EACH YEAR:



YEAR  ENDED:               12/31/89*   12/31/88*
12/31/87* 12/31/86*  12/31/85* ---------------------------
- ---------------------------------------------------
                                     

        
NET ASSET VALUE, BEGIN-
NING  OF  YEAR                  $7.04      $6.49
$6.54 $5.82      $4.45 -----------------------------------
- -------------------------------------------
INCOME FROM INVESTMENT
OPERATIONS:
  Net  investment income         0.18       0.18
0.14
0.12       0.12
 Net realized and
   unrealized
   gain/(loss) on
    investments                  1.90       0.69
0.32
1.01       1.38 ------------------------------------------
- ------------------------------------
TOTAL FROM INVESTMENT
   OPERATIONS                    2.08       0.87
0.46
1.13       1.50 ------------------------------------------
- ------------------------------------
LESS DISTRIBUTIONS:
 Distributions from net
    investment  income          (0.24)    (0.19)
(0.26) --                              (0.04)
 Distributions from cap-
    ital  gains                 (0.22)    (0.13)
(0.25) (0.41)     (0.09) ---------------------------------
- ---------------------------------------------
TOTAL  DISTRIBUTIONS           (0.46)     (0.32)
(0.51) (0.41)     (0.13) ---------------------------------
- ---------------------------------------------
NET ASSET VALUE, END OF
 YEAR                         $8.66      $7.04       $6.49
$6.54      $5.82 -----------------------------------------
- -------------------------------------
TOTAL  RETURN+                 29.55%     13.45%
6.95% 19.93%     34.38% ----------------------------------
- --------------------------------------------
RATIOS TO AVERAGE NET
  ASSETS/SUPPLEMENTAL
  DATA:
 Net assets, end of year
    (in  000's)             $1,000,433  $491,397
$431,092 $315,804   $179,186
 Ratio of expenses to
    average  net assets          0.90%     0.90%
0.90%
1.00%      1.00%
 Ratio of net income to
    average  net assets          3.20%     2.70%
2.20%
2.10%      2.40% -----------------------------------------
- -------------------------------------
PORTFOLIO  TURNOVER RATE          24%        25%
26%
30%        62% -------------------------------------------
- -----------------------------------


* Per share data and shares outstanding data adjusted for
4-
for-1 stock split
  which occurred on August 7, 1989.
+  Total  return represents aggregate total return  for
the
periods indicated and
  does not reflect any applicable sales charge.

10


SMITH BARNEY
Appreciation Fund Inc.

FINANCIAL HIGHLIGHTS (CONTINUED)

FOR A CLASS B SHARE OUTSTANDING THROUGHOUT EACH YEAR:




PERIOD

ENDED
YEAR     ENDED:
12/31/94
12/31/93#   12/31/92*#
- ----------------------------------------------------------
- -------------------
                                           


NET   ASSET  VALUE,  BEGINNING  OF  YEAR
$11.00
$10.65      $10.55
- ----------------------------------------------------------
- -------------------
INCOME FROM INVESTMENT OPERATIONS:
   Net   investment   income
0.13
0.06        0.01
 Net realized and unrealized gain/(loss) on
       investments
(0.29)
0.73        0.34
- ----------------------------------------------------------
- -------------------
TOTAL   FROM   INVESTMENT  OPERATIONS
(0.16)
0.79        0.35
- ----------------------------------------------------------
- -------------------
LESS DISTRIBUTIONS:
   Distributions  from  net  investment  income
(0.10)
(0.08)      (0.16)
   Distributions  from  capital  gains
(0.60)
(0.36)      (0.09)
- ----------------------------------------------------------
- -------------------
TOTAL     DISTRIBUTIONS
(0.70)
(0.44)      (0.25)
- ----------------------------------------------------------
- -------------------
NET   ASSET  VALUE,  END  OF  YEAR
$10.14
$11.00      $10.65
- ----------------------------------------------------------
- -------------------
TOTAL     RETURN++
1.53%
7.38%       3.28%
- ----------------------------------------------------------
- -------------------
RATIOS TO AVERAGE NET ASSETS/SUPPLEMENTAL
  DATA:
Net  assets,  end  of  year  (in  000's)          $761,000
$1,285,966  $1,122,249
  Ratio  of  expenses  to average  net  assets
1.80%
1.83%       1.82%+
  Ratio  of  net  income to average  net  assets
0.83%
0.56%       0.64%+
- ----------------------------------------------------------
- -------------------
PORTFOLIO   TURNOVER   RATE
52%
52%         21%
- ----------------------------------------------------------
- -------------------


*The Fund commenced offering Class B shares on November 6,
1992.
 +Annualized.
++  Total return represents aggregate total return  for
the
periods indicated and
   does not reflect any applicable sales charge.
# Per share amounts have been calculated using the monthly
average shares
    method, which more appropriately presents per share
data for this year since
    use  of  the undistributed income method did not
accord with results of opera-
   tions.


11


SMITH BARNEY
Appreciation Fund Inc.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES

    The   Fund's  sole  investment  objective  is  long-
term appreciation of sharehold-
ers'   capital  through  investments  primarily  in
equity securities. This invest-
ment  objective may not be changed without the  approval
of the holders of a
majority of the Fund's outstanding shares. There can  be
no assurance that the
Fund's investment objective will be achieved.

 The Fund attempts to achieve its investment objective  by
investing primarily
in equity securities (consisting of common stocks,
preferred stocks, warrants,
rights and securities convertible into common stocks)
which are believed to
afford attractive opportunities for investment
appreciation. The core holdings
of  the  Fund  are blue chip companies that are dominant
in their industries. At
the  same  time, the Fund may hold securities  of
companies with prospects of sus-
tained  earnings  growth and/or companies  with  a
cyclical earnings record if it
is felt these offer attractive investment opportunities.
For example, the Fund
may invest in the securities of companies whose earnings
are expected to
increase,  companies whose securities prices are lower
than are believed justi-
fied  in  relation  to their underlying  assets  or
earning power, or companies in
which  changes are anticipated that would result in
improved operations or prof-
itability. Typically, the Fund invests in middle- and
largersized companies,
though  it does invest in smaller companies whose
securities may reasonably be
expected  to appreciate. The Fund's investments  are
spread broadly among differ-
ent  industries.  The Fund may hold issues traded  over-the
counter as well as
those listed on one or more national exchanges, and the
Fund may make invest-
ments  in  foreign securities though management  intends
to limit such investments
to  10%  of  the Fund's assets. In analyzing securities
for investment, the Man-
ager considers many different factors, including past
growth records, manage-
ment capability, future earnings prospects and
technological innovation, as
well  as  general  market  and economic  factors  which
can
influence the price of
securities.  While the Manager considers dividend
potential in selecting invest-
ments,  current  income for distribution to shareholders
is secondary to the
Fund's    principal    objective   of   long-term
capital appreciation. The value of the
Fund's  investments, and thus the net  asset  value  of
the Fund's shares, will
fluctuate  in  response to changes in  market  and
economic conditions, as well as
the  financial condition and prospects of issuers  in
which the Fund invests.

Under normal market conditions, the majority of the Fund's
portfolio consists
of  common  stocks,  but it also may  contain  other
equity securities as described
above,  as  well as short-term money market instruments
for cash management pur-
poses.  When  the  Manager believes that  market
conditions warrant,

12


SMITH BARNEY
Appreciation Fund Inc.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

the Fund may adopt a temporary defensive investment
posture, and invest in debt
obligations  or  increase  investment  in  short-term
money market instruments, and
may engage in repurchase agreement transactions with
respect to the securities
it   is   authorized  to  hold  (as  described  below
under "Investments and Strate-
gies").

 Further information about the Fund's investment policies,
including a list of
those  restrictions on its investment activities that
cannot be changed without
shareholder approval, appears in the Statement of
Additional Information.

  INVESTMENTS AND STRATEGIES
 LENDING  OF PORTFOLIO SECURITIES. From time to time,  the
Fund may lend its
portfolio securities to brokers, dealers and other
financial organizations.
These  loans  may  not exceed 33 1/3% of  the  Fund's
total assets taken at value.
Loans   of  portfolio  securities  by  the  Fund   will
be collateralized by cash, let-
ters   of  credit  or  obligations  of  the  United
States government or its agencies
and  instrumentalities ("U.S. government securities")
which are maintained at
all times in an amount equal to at least 100% of the
current market value of
the  loaned securities. By lending its portfolio
securities, the Fund will seek
to  generate income by continuing to receive interest on
the loaned securities,
by  investing the cash collateral in short-term
instruments or by obtaining
yield in the form of interest paid by the borrower when
U.S. government securi-
ties  are used as collateral. The risks in lending
portfolio securities, as with
other  extensions  of  secured credit, consist  of
possible delays in receiving
additional  collateral or in the recovery of the
securities or possible loss of
rights   in   the   collateral  should  the  borrower
fail financially. Loans will be
made  to  firms deemed by the Manager to be of good
standing and will not be made
unless, in the judgment of the Manager, the consideration
to be earned from
such loans would justify the risk.

 SHORT-TERM  INVESTMENTS. As noted  above,  the  Fund  may
invest in short-term
money   market   instruments,  such  as:   U.S.
government securities; certificates of
deposit,  time deposits and bankers' acceptances  issued
by domestic banks (in-
cluding their branches located outside the United States
and subsidiaries
located  in  Canada), domestic branches  of  foreign
banks, savings and loan asso-
ciations  and  similar institutions; high  grade
commercial paper; and repurchase
agreements with respect to such instruments.

REPURCHASE AGREEMENTS. The Fund will enter into repurchase
agreements with
banks  which  are the issuers of instruments acceptable
for purchase by the


13


SMITH BARNEY
Appreciation Fund Inc.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

Fund and with certain dealers on the Federal Reserve Bank
of New York's list of
reporting  dealers. Under the terms of a typical
repurchase agreement, the Fund
would  acquire  an  underlying obligation for  a
relatively short period (usually
not  more  than  one week) subject to an obligation  of
the seller to repurchase,
and  the  Fund  to resell, the obligation at an  agreed-
upon price and time,
thereby  determining  the yield during  the  Fund's
holding period. This arrange-
ment  results in a fixed rate of return that is not
subject to market fluctua-
tions  during the Fund's holding period. Further
information on repurchase
agreements  and  the risks associated with such
investments appears in the State-
ment of Additional Information.
   PORTFOLIO TRANSACTIONS AND TURNOVER. Portfolio securities
transactions on
behalf  of the Fund are placed by the Manager with a  number
of brokers and deal-
ers,  including Smith Barney. Smith Barney has  advised  the
Fund that in transac-
tions with the Fund, Smith Barney charges a commission  rate
at least as favora-
ble  as  the  rate that Smith Barney charges its  comparable
unaffiliated customers
in similar transactions.

   The  Fund generally does not engage in short-term trading
but intends to pur-
chase  securities for long-term capital appreciation.  While
the Fund's portfolio
rate  has  in  the  past exceeded 100%,  the  Fund's  annual
portfolio turnover rate
is not expected to exceed 100%.

   FOREIGN SECURITIES. The Fund may invest in securities  of
non-U.S. issuers in
the  form of American Depositary Receipts ("ADRs"), European
Depositary Receipts
("EDRs") or similar securities representing interests in the
common stock of
foreign  issuers.  Management intends to  limit  the  Fund's
investment in these
types  of  securities, together with other types of  foreign
securities, to 10% of
the  Fund's net assets. ADRs are receipts, typically  issued
by a U.S. bank or
trust company, which evidence ownership of underlying securities
issued by a
foreign  corporation.  EDRs are receipts  issued  in  Europe
which evidence a simi-
lar  ownership  arrangement. Generally, ADRs, in  registered
form, are designed
for use in the U.S. securities markets and EDRs are designed
for use in Euro-
pean  securities markets. The underlying securities are  not
always denominated
in   the  same  currency  as  the  ADRs  or  EDRs.  Although
investment in the form of
ADRs  or EDRs facilitates trading in foreign securities,  it
does not mitigate
the risks associated with investing in foreign securities.

   Investments in foreign securities incur higher costs than
investments in U.S.
securities,  including  higher costs  in  making  securities
transactions as well as

14


SMITH BARNEY
Appreciation Fund Inc.

INVESTMENT OBJECTIVE AND MANAGEMENT POLICIES (CONTINUED)

foreign  government  taxes which may reduce  the  investment
return of the Fund. In
addition,  foreign investments may include additional  risks
associated with cur-
rency  exchange  rates, less complete financial
information about individual com-
panies, less market liquidity and political instability.

VALUATION OF SHARES


 The Fund's net asset value per share is determined as  of
the close of regular
trading  on the NYSE, on each day that the NYSE is open,
by dividing the value
of  the Fund's net assets attributable to each Class by
the total number of
shares of the Class outstanding.

 Generally,  the Fund's investments are valued  at  market
value or, in the
absence of a market value with respect to any securities,
at fair value as
determined by or under the direction of the Fund's Board
of Directors. Short-
term  investments that mature in 60 days or less are
valued at amortized cost
whenever  the  Fund's  Board  of Directors  determines
that amortized cost is the
fair   value   of  those  instruments.  Further
information regarding the Fund's valu-
ation  policies is contained in the Statement of
Additional Information.

DIVIDENDS, DISTRIBUTIONS AND TAXES


 DIVIDENDS AND DISTRIBUTIONS

 The  Fund's policy is to distribute substantially all  of
its net investment
income  (that  is,  its income other than its  net
realized capital gains) and net
realized capital gains, if any, once a year, normally at
the end of the year in
which earned or at the beginning of the next year.

 If  a  shareholder does not otherwise instruct, dividends
and capital gains
distributions will be reinvested automatically in
additional shares of the same
Class  at  net  asset value, subject to no sales  charge
or CDSC. In order to avoid
the  application  of  a 4.00% nondeductible  excise  tax
on certain undistributed
amounts  of ordinary income and capital gains, the Fund
may make an additional
distribution,  shortly before December 31 in each  year,
of any undistributed
ordinary  income  or capital gains and expects  to  pay
any other dividends and
distributions  necessary to avoid the  application  of
this tax.


15


SMITH BARNEY
Appreciation Fund Inc.
DIVIDENDS, DISTRIBUTIONS AND TAXES (CONTINUED)


 The per share dividends on Class B shares of the Fund may
be lower than the
per  share  dividends  on Class A shares  principally  as
a result of the distribu-
tion   fee  applicable  with  respect  to  Class  B
shares. Distributions of capital
gains,  if any, will be in the same amount for Class  A
and Class B shares.

 TAXES

 The Fund has qualified and intends to continue to qualify
as a "regulated
investment  company" under the Code. To  qualify,  the
Fund must first meet cer-
tain  tests, including the distribution of at least  90%
of its investment com-
pany  taxable  income (which includes,  among  other
items, dividends, interest and
the excess of any net short-term capital gains over net
longterm capital loss-
es).

    Dividends   paid   from   net  investment   income
and distributions of net realized
short-term  capital  gains are taxable  to  shareholders
as ordinary income,
regardless  of  how long shareholders have held  their
Fund shares and whether
such  dividends and distributions are received  in  cash
or reinvested in addi-
tional  Fund shares. Distributions of net realized long-
term capital gains will
be  taxable  to  shareholders as  long-term  capital
gains, regardless of how long
shareholders   have  held  Fund  shares  and  whether
such distributions are received
in  cash  or  are  reinvested  in  additional  Fund
shares. Furthermore, as a general
rule,  a  shareholder's gain or loss on a sale or
redemption of Fund shares will
be  a long-term capital gain or loss if the shareholder
has held the shares for
more than one year and will be a short-term capital gain
or loss if the share-
holder has held the shares for one year or less. Some of
the Fund's dividends
declared  from  net investment income may  qualify  for
the Federal dividends-
received deduction for corporations.

 Statements  as  to  the tax status of each  shareholder's
dividends and distribu-
tions  are  mailed  annually.  Each  shareholder  also
will receive, if appropriate,
various written notices after the close of the Fund's
prior taxable year as to
the  Federal  income tax status of his or her dividends
and distributions which
were  received from the Fund during the Fund's prior
taxable year. Shareholders
should  consult their own tax advisors about the  status
of the Fund's dividends
and distributions for state and local tax liabilities.

16


SMITH BARNEY
Appreciation Fund Inc.

PURCHASE OF SHARES


 GENERAL

 The  Fund  offers  two  Classes of  shares  to  investors
purchasing through PFS
Investments  Representatives. Class A  shares  are  sold
to investors with an ini-
tial  sales  charge and Class B shares are sold  without
an initial sales charge
but  are subject to a CDSC payable upon certain
redemptions. See "Prospectus
Summary--Alternative Purchase Arrangements" for a
discussion of factors to con-
sider in selecting which Class of shares to purchase.

 Initial  purchases of Fund shares must be made through  a
PFS Investments Rep-
resentative by completing the appropriate application
found in the prospectus.
The  completed application should be forwarded to  the
SubTransfer Agent, 3100
Breckinridge  Blvd.,  Bldg 200, Duluth, Georgia  30199-
0062. Checks drawn on for-
eign  banks  must be payable in U.S. dollars  and  have
the routing number of the
U.S.  bank encoded on the check. Subsequent investments
may be sent directly to
the Sub-Transfer Agent.

 Investors  in  Class A and Class B  shares  may  open  an
account by making an ini-
tial investment of at least $1,000 for each account, or
$250 for an IRA or a
Self-Employed  Retirement  Plan in  the  Fund.  The
initial investment amount will
be  waived for accounts establishing a Systematic
Investment Plan. Subsequent
investments  of at least $50 may be made for  both
Classes. For participants in
retirement  plans qualified under Section 403(b)(7)  of
the Code, the minimum
initial  and  subsequent  investment  requirement  for
both Classes in the Fund is
$25.  For the Fund's Systematic Investment Plan, the
minimum initial and subse-
quent  investment requirement for both Classes is $50.
There are no minimum
investment requirements for Class A shares for employees
of Travelers and its
subsidiaries, including Smith Barney, Directors of the
Fund and their spouses
and children. The Fund reserves the right to waive or
change minimums, to
decline any order to purchase its shares and to suspend
the
offering of shares
from  time  to time. Shares purchased will be  held  in
the shareholder's account
by  the  Sub-Transfer Agent. Share certificates  are
issued
only upon a sharehold-
er's written request to the Sub-Transfer Agent.

 Purchase orders received by the Sub-Transfer Agent  prior
to the close of reg-
ular trading on the NYSE, on any day the Fund calculates
its net asset value,
are  priced  according to the net asset value determined
on that day (the "trade
date").


17


SMITH BARNEY
Appreciation Fund Inc.

PURCHASE OF SHARES (CONTINUED)


 SYSTEMATIC INVESTMENT PLAN

 Shareholders may make additions to their accounts at  any
time by purchasing
shares  through a service known as the Systematic
Investment Plan. Under the
Systematic  Investment  Plan,  the  Sub-Transfer  Agent
is authorized through preau-
thorized transfers of $50 or more to charge the regular
bank account or other
financial  institution indicated by  the  shareholder  on
a monthly or quarterly
basis  to  provide systematic additions to the
shareholder's Fund account. A
shareholder  who  has  insufficient funds  to  complete
the transfer will be charged
a fee of up to $25 by PFS or the Sub-Transfer Agent.
 INITIAL SALES CHARGE ALTERNATIVE -- CLASS A SHARES
 The  sales  charges applicable to purchases  of  Class  A
shares of the Fund are
as follows:



                                SALES CHARGE AS ----------
                              --------------------
DEALERS'
                                 %    OF             %
OF REALLOWANCE AS % OF
 AMOUNT  OF  INVESTMENT   OFFERING PRICE  AMOUNT  INVESTED
OFFERING PRICE -------------------------------------------
- -------------------------------
                                  

    Less   than   $  25,000           5.00%
5.26%
4.50%
    $   25,000   -   49,999            4.00
4.17
3.60
       50,000   -    99,999            3.50
3.63
3.15
      100,000   -   249,999            3.00
3.09 2.70
      250,000   -   499,999            2.00
2.04 1.80
     500,000   -   and   over            *
* * ------------------------------------------------------
- --------------------

*  PURCHASES  OF  CLASS A SHARES, WHICH WHEN  COMBINED
WITH
CURRENT HOLDINGS OF
CLASS A SHARES OFFERED WITH A SALES CHARGE EQUAL OR EXCEED
$500,000 IN THE
 AGGREGATE,  WILL BE MADE AT NET ASSET VALUE  WITHOUT  ANY
INITIAL SALES CHARGE,
BUT WILL BE SUBJECT TO A CDSC OF 1.00% ON REDEMPTIONS MADE
WITHIN 12 MONTHS
OF PURCHASE. THE CDSC ON CLASS A SHARES IS PAYABLE TO PFS,
WHICH, IN TURN,
    PAYS  PFS  INVESTMENTS  TO  COMPENSATE  ITS
INVESTMENTS REPRESENTATIVES WHOSE
 CLIENTS MAKE PURCHASES OF $500,000 OR MORE. THE  CDSC  IS
WAIVED IN THE SAME
 CIRCUMSTANCES  IN WHICH THE CDSC APPLICABLE  TO  CLASS  B
SHARES IS WAIVED. SEE
 "DEFERRED  SALES  CHARGE ALTERNATIVES"  AND  "WAIVERS  OF
CDSC."

 The  reduced  sales  charges shown  above  apply  to  the
aggregate of purchases of
Class A shares of the Fund made at one time by "any
person," which includes an
individual, his or her spouse and children, or a trustee
or other fiduciary of
a  single  trust  estate  or single fiduciary  account.
The
reduced sales charge
minimums  may  also be met by aggregating the purchase
with the net asset value
of  all  Class A shares offered with a sales charge held
in
funds sponsored by
Smith  Barney  that are offered with a sales  charge
listed under "Exchange Privi-
lege."

18


SMITH BARNEY
Appreciation Fund Inc.

PURCHASE OF SHARES (CONTINUED)


 INITIAL SALES CHARGE WAIVERS

Purchases of Class A shares may be made at net asset value
without a sales
charge in the following circumstances: (a) sales of Class
A shares to Directors
of the Fund and employees of Travelers and its
subsidiaries, or the spouses and
children of such persons (including the surviving spouse
of a deceased Director
or  employee, and retired Directors or employees), or
sales
to any trust, pen-
sion,  profit-sharing or other benefit plan for such
persons provided such sales
are  made  upon  the  assurance of the  purchaser  that
the purchase is made for
investment  purposes  and that the securities  will  not
be resold except through
redemption  or repurchase; (b) offers of Class A  shares
to any other investment
company  in connection with the combination of such
company with the Fund by
merger, acquisition of assets or otherwise; (c)
shareholders who have redeemed
Class  A  shares in the Fund (or Class A shares  of
another fund in the Smith Bar-
ney  Mutual Funds that are offered with a sales charge
equal to or greater than
the  maximum  sales  charge of the Fund)  and  who  wish
to reinvest their redemption
proceeds  in  the  Fund, provided the reinvestment  is
made within 60 calendar days
of  the  redemption;  (d)  accounts  managed  by
registered investment advisory sub-
sidiaries   of   Travelers;  and  (e)  sales   through
PFS Investments Representatives
where the amounts invested represent the redemption
proceeds from investment
companies  distributed by an entity other than PFS,  on
the condition that (i)
the  redemption has occurred no more than 60 days  prior
to the purchase of the
shares, (ii) the shareholder paid an initial sales charge
on such redeemed
shares and (iii) the shares redeemed were not subject  to
a deferred sales
charge.    PFS   Investments   may   pay   its
Investments Representatives an amount equal
to  0.40%  of the amount invested if the purchase
represents redemption proceeds
from  an  investment company distributed by an entity
other than PFS. In order to
obtain such discounts, the purchaser must provide
sufficient information at the
time  of  purchase to permit verification that the
purchase would qualify for the
elimination of the sales charge.

 VOLUME DISCOUNTS

The  "Amount of Investment" referred to in the sales
charge table set forth
above  under  "Initial  Sales  Charge  Alternative--Class
A Shares" includes the
purchase  of  Class A shares in the Fund and of other
funds sponsored by Smith
Barney  that  are offered with a sales charge  listed
under "Exchange Privilege."A
person   eligible  for  a  volume  discount   includes:
an individual; members of a
family unit comprising a husband, wife and minor children;
a trustee or other


19


SMITH BARNEY
Appreciation Fund Inc.
PURCHASE OF SHARES (CONTINUED)
fiduciary   purchasing  for  a  single   fiduciary
account including pension, profit-
sharing  and  other employee benefit trusts qualified
under Section 401(a) of the
Code,  or  multiple custodial accounts where more  than
one beneficiary is
involved  if  purchases are made by salary reduction
and/or payroll deductionfor
qualified  and  nonqualified accounts and transmitted  by
a common employer enti-
ty.  Employer  entity  for payroll  deduction  accounts
may include trade and craft
associations and any other similar organizations.

 LETTER OF INTENT

A Letter of Intent for amounts of $50,000 or more provides
an opportunity for
an  investor to obtain a reduced sales charge by
aggregating the investments
over a 13-month period, provided that the investor refers
to such Letter when
placing  orders.  For purposes of a Letter  of  Intent,
the "Amount of Investment"
as  referred to in the preceding sales charge table
includes purchases of all
Class  A  shares of the Fund and other funds  of  the
Smith Barney Mutual Funds
that  are offered with a sales charge listed under
"Exchange Privilege" over a
13-month  period  based  on  the total  amount  of
intended purchases plus the value
of  all Class A shares previously purchased and still
owned. An alternative is
to compute the 13-month period starting up to 90 days
before the date of execu-
tion of a Letter of Intent. Each investment made during
the period receives the
reduced sales charge applicable to the total amount  of
the investment goal. If
the  goal  is  not achieved within the period, the
investor must pay the differ-
ence  between the sales charges applicable to the
purchases made and the charges
previously paid, or an appropriate number of escrowed
shares will be redeemed.

 DEFERRED SALES CHARGE ALTERNATIVES

 "CDSC Shares" are sold at net asset value next determined
without an initial
sales  charge  so  that  the full amount  of  an
investor's purchase payment may be
immediately  invested in the Fund. A CDSC, however,  may
be imposed on certain
redemptions of these shares. "CDSC Shares" are: (a) Class
B shares, and (b)
Class  A  shares  which, when combined with Class  A
shares offered with a sales
charge  currently  held  by  an investor,  equal  or
exceed $500,000 in the
aggregate.

Any applicable CDSC will be assessed on an amount equal to
the lesser of the
original  cost  of the shares being redeemed  or  their
net asset value at the time
of  redemption. CDSC Shares that are redeemed  will  not
be subject to a

20


SMITH BARNEY
Appreciation Fund Inc.

PURCHASE OF SHARES (CONTINUED)

CDSC to the extent that the value of such shares
represents: (a) capital appre-
ciation  of  Fund assets; (b) reinvestment of  dividends
or capital gain distribu-
tions;  (c) with respect to Class B shares, shares
redeemed more than five years
after  their purchase; or (d) with respect to Class A
shares that are CDSC
Shares,  shares  redeemed more than 12  months  after
their purchase.

Class A shares that are CDSC Shares are subject to a 1.00%
CDSC if redeemed
within 12 months of purchase. In circumstances in which
the CDSC is imposed on
Class B shares, the amount of the charge will depend on
the number of years
since  the shareholder made the purchase payment from
which the amount is being
redeemed.  Solely for purposes of determining the number
of years since a pur-
chase  payment,  all purchase payments made during  a
month will be aggregated and
deemed  to  have been made on the last day of the
preceding Smith Barney state-
ment month. The following table sets forth the rates of
the charge for redemp-
tions of Class B shares by shareholders.



     YEAR SINCE PURCHASE
     PAYMENT WAS MADE      CDSC --------------------------
- ------
                        
     First                 5.00%
     Second                4.00
     Third                 3.00
     Fourth                2.00
     Fifth                 1.00
     Sixth                 0.00
     Seventh               0.00
     Eighth                0.00
- --------------------------------


 Class  B  shares will convert automatically  to  Class  A
shares eight years after
the date on which they were purchased and thereafter will
no longer be subject
to  any  distribution fee. There will also be  converted
at that time such propor-
tion of Class B Dividend Shares owned by the shareholder
as the total number of
his  or  her Class B shares converting at the time bears
to the total number of
outstanding  Class  B shares (other than  Class  B
Dividend Shares) owned by the
shareholder.

 In determining the applicability of any CDSC, it will  be
assumed that a
redemption  is  made  first of shares  representing
capital appreciation, next of
shares  representing  the  reinvestment  of  dividends
and capital gains distribu-
tions  and  finally of other shares held by the
shareholder for the longest
period of time. The length of time that CDSC Shares
acquired through an
exchange  have  been held will be calculated from  the
date that the shares
exchanged were initially


21


SMITH BARNEY
Appreciation Fund Inc.

PURCHASE OF SHARES (CONTINUED)

acquired in one of the other Smith Barney Mutual Funds,
and Fund shares being
redeemed  will  be considered to represent,  as
applicable, capital appreciation
or  dividend and capital gain distribution reinvestments
in such other funds.
For Federal income tax purposes, the amount of the CDSC
will reduce the gain or
increase  the  loss,  as  the case may  be,  on  the
amount realized on redemption.
The amount of any CDSC will be paid to PFS.

 To  provide an example, assume an investor purchased  100
Class B shares at $10
per  share  for a cost of $1,000. Subsequently the
investor acquired 5 additional
shares  through dividend reinvestment. During the
fifteenth month after the pur-
chase,  the  investor decided to redeem $500 of his  or
her investment. Assuming
at  the  time  of  the redemption the net  asset  value
had appreciated to $12 per
share,  the value of the investor's shares would  be
$1,260 (105 shares at $12
per  share).  The CDSC would not be applied  to  the
amount which represents appre-
ciation  ($200)  and  the value of the  reinvested
dividend shares ($60). There-
fore, $240 of the $500 redemption proceeds ($500-$260)
would be charged at a
rate  of 4% (the applicable rate for Class B shares)  for
a total deferred sales
charge of $9.60.

 WAIVERS OF CDSC

 The  CDSC will be waived on: (a) exchanges (see "Exchange
Privilege"); (b)
automatic cash withdrawals in amounts equal to or less
than 1.00% per month of
the  value  of  the shareholder's shares  at  the  time
the withdrawal plan commences
(see   "Redemption  of  Shares--Automatic  Cash
Withdrawal Plan"); (c) redemption of
shares within 12 months following the death or disability
of the shareholder;
(d)  redemption of shares made in connection with
qualified distributions from
retirement plans or IRAs upon the attainment of age 59
1/2; (e) involuntary
redemptions, and (f) redemption of shares in connection
with a    combination of
the  Fund with any investment company by merger,
acquisition of assets or other-
wise.  In  addition, a shareholder who has  redeemed
shares from other funds of
the   Smith   Barney   Mutual  Funds  may,   under
certain circumstances, reinvest all or
part  of  the redemption proceeds within 60 days and
receive pro rata credit for
any CDSC imposed on the prior redemption.

 CDSC  waivers will be granted subject to confirmation  by
PFS of the sharehold-
er's status or holdings, as the case may be.

22


SMITH BARNEY
Appreciation Fund Inc.

EXCHANGE PRIVILEGE


 Except as otherwise noted below, shares of each Class may
be exchanged at the
net asset value next determined for shares of the same
Class in the following
funds of the Smith Barney Mutual Funds, to the extent
shares are offered for
sale  in the shareholder's state of residence. Exchanges
of shares are subject
to  minimum  investment  requirements  and  all  shares
are subject to the other
requirements of the fund into which exchanges are made and
a sales charge dif-
ferential may apply.

  FUND NAME:

  Smith Barney Growth Opportunity Fund Smith Barney

  Investment Grade Bond Fund

Class  A Exchanges. Class A shares of Smith Barney Mutual
Funds sold without a
sales charge or with a maximum sales charge of less than
the maximum charged by
other  Smith  Barney Mutual Funds will  be  subject  to
the appropriate "sales
charge  differential" upon the exchange of their shares
for Class A shares of a
fund  sold  with  a higher sales charge. The  "sales
charge differential" is lim-
ited to a percentage rate no greater than the excess of
the sales charge rate
applicable  to purchases of shares of the mutual fund
being acquired in the
exchange over the sales charge rate(s) actually paid on
the mutual fund shares
relinquished in the exchange and on any predecessor of
those shares. For pur-
poses  of  the  exchange privilege, shares obtained
through automatic reinvestment
of  dividends and capital gains distributions are treated
as having paid the
same  sales  charges applicable to the shares on  which
the dividends or distribu-
tions  were  paid; however, if no sales charge  was
imposed upon the initial pur-
chase  of  the shares, any shares obtained through
automatic reinvestment will be
subject to a sales charge differential upon exchange.

 Class  B  Exchanges. In the event a Class  B  shareholder
wishes to exchange all
or  a  portion  of  his or her shares in any  of  the
funds imposing a higher CDSC
than  that imposed by the Fund, the exchanged Class B
shares will be subject to
the  higher applicable CDSC. Upon an exchange, the new
Class B shares will be
deemed to have been purchased on the same date as the
Class B shares of the
Fund that have been exchanged.

 Additional Information Regarding the Exchange  Privilege.
Although the
exchange   privilege  is  an  important  benefit,
excessive exchange transactions can


23


SMITH BARNEY
Appreciation Fund Inc.

EXCHANGE PRIVILEGE (CONTINUED)

be   detrimental   to   the  Fund's  performance   and
its shareholders. The Manager may
determine  that a pattern of frequent exchanges is
excessive and contrary to the
best  interests  of the Fund's other shareholders.  In
this event, the Manager
will  notify PFS and PFS may, at its discretion,  decide
to limit additional pur-
chases  and/or  exchanges by the shareholder.  Upon  such
a determination by the
Fund, PFS will provide notice in writing or by telephone
to the shareholder at
least 15 days prior to suspending the exchange privilege
and during the 15-day
period the shareholder will be required to (a) redeem his
or her shares in the
Fund or (b) remain invested in the Fund or exchange into
any of the Smith Bar-
ney  Mutual  Funds listed under "Exchange Privilege,"
which position the share-
holder  would  be  expected to maintain  for  a
significant period of time. All rel-
evant  factors  will  be  considered  in  determining
what constitutes an abusive
pattern of exchanges.

 Exchanges  will be processed at the net asset value  next
determined, plus any
applicable  sales charge differential. Redemption
procedures discussed below are
also applicable for exchanging shares, and exchanges will
be made upon receipt
of  all  supporting documents in proper form. If the
account registration of the
shares  of  the  fund  being acquired is  identical  to
the registration of the
shares  of  the  fund exchanged, no signature  guarantee
is required. A capital
gain  or  loss  for tax purposes will be realized  upon
the exchange, depending
upon  the  cost  or  other basis of shares redeemed.
Before exchanging shares,
investors should read the current prospectus describing
the shares to be
acquired.   The  Fund  reserves  the  right  to  modify
or discontinue exchange privi-
leges upon 60 days' prior notice to shareholders.

REDEMPTION OF SHARES


 Shareholders  may redeem for cash some or  all  of  their
shares of the Fund at
any  time  by  sending  a  written request  in  proper
form directly to the Sub-Trans-
fer  Agent,  PFS Shareholder Services, at 3100
Breckinridge Blvd., Bldg. 200,
Duluth,   Georgia   30199-0062.  Shareholders   who,
after reviewing the information
below, have questions on how to redeem their accounts
should contact the Sub-
Transfer   Agent   at  (800)  544-5445  or  Spanish-
speaking representatives at (800)
544-7278 or TDD Line for the Hearing Impaired at (800)
8241721.

 As  described under "Purchase of Shares," redemptions  of
Class B shares are
subject to a contingent deferred sales charge.

24


SMITH BARNEY
Appreciation Fund Inc.

REDEMPTION OF SHARES (CONTINUED)


 The  request for redemption must be signed by all persons
in whose names the
shares  are  registered. Signatures must conform exactly
to the account registra-
tion.  If the proceeds of the redemption exceed $50,000,
or if the proceeds are
not to be paid to the record owner(s) at the record
address, if the sharehold-
er(s)  has had an address change in the past 45 days, or
if the shareholder(s)
is  a  corporation, sole proprietor, partnership,  trust
or fiduciary, signa-
ture(s) must be guaranteed by one of the following:  a
bank or trust company; a
broker-dealer;   a  credit  union;  a  national
securities exchange, registered secu-
rities  association or clearing agency; a savings  and
loan association; or a
federal savings bank.

 Generally, a properly completed Redemption Form with  any
required signature
guarantee is all that is required for a redemption. In
some cases, however,
other  documents may be necessary. For example, in the
case of shareholders
holding certificates, the certificates for the shares
being redeemed must
accompany  the  redemption request.  Additional
documentary evidence of authority
is   required  by  the  Sub-Transfer  Agent  in  the
event redemption is requested by a
corporation,  partnership,  trust,  fiduciary,  executor
or administrator. Addi-
tionally,  if  a  shareholder requests a redemption  from
a Retirement Plan account
(IRA, SEP or 403(b)(7) ), such request must state whether
or not federal income
tax  is  to  be withheld from the proceeds of the
redemption check.

 A shareholder may utilize the Sub-Transfer Agent's FAX to
redeem his or her
account   as  long  as  a  signature  guarantee   or
other documentary evidence is not
required.  Redemption requests should be properly signed
by all owners of the
account  and faxed to the Sub-Transfer Agent at  (800)
5542374. Facsimile
redemptions  may not be available if the shareholder
cannot reach the Sub-Trans-
fer  Agent  by FAX, whether because all telephone lines
are busy or for any other
reason;  in such case, a shareholder would have to  use
the Fund's regular
redemption  procedure described above. Facsimile
redemptions received by the
Sub-Transfer  Agent prior to 4:00 p.m.  Eastern  time  on
a regular business day
will   be  processed  at  the  net  asset  value  per
share determined that day.

 In all cases, the redemption price is the net asset value
per share of the
Fund  next  determined after the request for  redemption
is received in proper
form  by the Sub-Transfer Agent. Payment for shares
redeemed
will be made by
check mailed within three days after acceptance by the
SubTransfer Agent of
the  request  and  any other necessary documents  in
proper order. Such payment may
be  postponed  or  the  right  of  redemption  suspended
as provided by the rules of
the  SEC.  If  the shares to be redeemed have been
recently purchased by check or
draft,  the Sub-Transfer Agent may hold the payment  of
the proceeds until the


25


SMITH BARNEY
Appreciation Fund Inc.

REDEMPTION OF SHARES (CONTINUED)

purchase check or draft has cleared, usually a period of
up to 15 days. Any
taxable  gain or loss will be recognized by the
shareholder upon redemption of
shares.

 After following the above-stated redemption guidelines, a
shareholder may
elect  to  have  the  redemption  proceeds  wire-
transferred directly to the share-
holder'  bank  account  of record (defined  as  a
currently established pre-autho-
rized  draft  on the shareholder's account with  no
changes within the previous 45
days), as long as the bank account is registered in the
same name(s) as the
account  with the Fund. If the proceeds are not to be
wired to the bank account
of  record,  or mailed to the registered owner, a
signature guarantee will be
required  from all shareholders. A $25 service fee  will
be charged by the Sub-
Transfer Agent to help defray the administrative expense
of executing a wire
redemption.  Redemption proceeds will normally be  wired
to the designated bank
account  on  the next business day following the
redemption, and should ordinar-
ily be credited to the shareholder's bank account by
his/her bank within 48 to
72 hours.

 AUTOMATIC CASH WITHDRAWAL PLAN

 The Fund offers shareholders an automatic cash withdrawal
plan, under which
shareholders who own shares with a value of at least
$10,000 may elect to
receive  periodic cash payments of at least $50  monthly
or quarterly. Retirement
plan  accounts  are eligible for automatic  cash
withdrawal plans only where the
shareholder  is eligible to receive qualified
distributions and has an account
value  of  at  least  $5,000. The withdrawal  plan  will
be
carried over on exchanges
between  funds  or Classes of the Fund. Any applicable
CDSC will not be waived on
amounts  withdrawn by a shareholder that  exceed  1.00%
per month of the value of
the shareholder's shares subject to the CDSC at the time
the withdrawal plan
commences.  For further information regarding the
automatic cash withdrawal
plan, shareholders should contact the Sub-Transfer Agent.

MINIMUM ACCOUNT SIZE


The Fund reserves the right to involuntarily liquidate any
shareholder's
account in the Fund if the aggregate net asset value of
the shares held in the
Fund  account is less than $500. (If a shareholder has
more than one account in
this  Fund,  each  account must satisfy the minimum
account size). The Fund, how-
ever,   will  not  redeem  shares  based  solely  on
market reductions in net asset
value.  Before  the Fund exercises such right,
shareholders will receive written

26


SMITH BARNEY
Appreciation Fund Inc.

MINIMUM ACCOUNT SIZE

notice and will be permitted 60 days to bring accounts up
to the minimum to
avoid automatic redemption.

PERFORMANCE


 From  time to time the Fund may include its total return,
average annual total
return  and current dividend return in advertisements
and/or other types of
sales literature. These figures are computed separately
for Class A and Class B
shares  of  the Fund. These figures are based on
historical earnings and are not
intended  to  indicate future performance. Total  return
is computed for a speci-
fied  period of time assuming deduction of the maximum
sales charge, if any,
from  the  initial amount invested and reinvestment  of
all income dividends and
capital  gain  distributions on the  reinvestment  dates
at prices calculated as
stated  in this Prospectus, then dividing the value  of
the investment at the end
of  the  period so calculated by the initial amount
invested and subtracting
100%.   The   standard  average  annual  total  return,
as prescribed by the SEC, is
derived  from this total return, which provides  the
ending redeemable value.
Such   standard  total  return  information  may   also
be accompanied with nonstandard
total  return information for differing periods computed
in the same manner but
without annualizing the total return or taking sales
charges into account. The
Fund  calculates current dividend return for each  Class
by annualizing the most
recent  monthly distribution and dividing by the  net
asset value or the maximum
public  offering price (including sales charge) on the
last day of the period
for  which current dividend return is presented. The
current dividend return for
each  Class may vary from time to time depending  on
market conditions, the com-
position of its investment portfolio and operating
expenses. These factors and
possible  differences  in the methods  used  in
calculating current dividend return
should  be considered when comparing a Class' current
return to yields published
for   other   investment  companies  and  other
investment vehicles. The Fund may also
include  comparative performance information in
advertising or marketing its
shares.  Such performance information may include data
from Lipper Analytical
Services,  Inc. and other financial publications.  The
Fund will include perfor-
mance   data  for  Class  A  and  Class  B  shares  in
any advertisement or information
including performance data of the Fund.

MANAGEMENT OF THE FUND


 BOARD OF DIRECTORS

 Overall responsibility for management and supervision  of
the Fund rests with
the  Fund's  Board of Directors. The Directors  approve
all significant agreements


27


SMITH BARNEY
Appreciation Fund Inc.

MANAGEMENT OF THE FUND (CONTINUED)

between the Fund and the companies that furnish services
to the Fund, including
agreements   with   its  distributor,  investment
adviser, custodian and transfer
agent.  The day-to-day operations of the Fund are
delegated to the Fund's
investment  adviser. The Statement of Additional
Information contains background
information regarding each Director and executive officer
of the Fund.

 MANAGER -- SBMFM

 The  Manager, located at 388 Greenwich Street, New  York,
New York 10013,
serves as the Fund's investment adviser and manages the
dayto-day operations
of  the Fund pursuant to a management agreement entered
into by the Manager and
the  Fund.  The  Manager, which is a  registered
investment adviser, has (through
its predecessors) been in the investment counseling
business since 1940 and
renders  investment advice to investment companies that
had aggregate assets
under  management as of January 31, 1995, in excess of
$51.9 billion.

 Subject  to the supervision and direction of  the  Fund's
Board of Directors,
the  Manager manages the Fund's portfolio in accordance
with the Fund's stated
investment   objective   and  policies,   makes
investment decisions for the Fund,
places  orders to purchase and sell securities  and
employs professional portfo-
lio  managers  and securities analysts who provide
research services to the Fund.

 Investment  advisory  fees are computed  daily  and  paid
monthly at the following
annual rates of the Fund's average daily net assets 0.55%
up to $250 million;
0.513%  of  the next $250 million; 0.476% of the  next
$500 million; 0.439% of the
next  $1 billion; 0.402% of the next $1 billion, and
0.365% of the net assets in
excess of $3 billion. For the fiscal year ended December
31, 1994, the Fund
paid investment advisory fees equal to 0.45% of the value
of its net assets.

 PORTFOLIO MANAGEMENT

 Harry D. Cohen, Vice President and Investment Officer  of
the Fund, is primar-
ily  responsible  for management of the Fund's  assets.
Mr. Cohen has served in
this capacity since January 1979, and manages the day-to-
day operations of the
Fund including making all investment decisions.

 Management's  discussion  and  analysis,  and  additional
performance information
regarding the Fund during the fiscal year ended December
31, 1994 are

28


SMITH BARNEY
Appreciation Fund Inc.

MANAGEMENT OF THE FUND (CONTINUED)

included  in  the Annual Report dated December 31,  1994.
A copy of the Annual
Report may be obtained upon request and without charge
from the Sub-Transfer
Agent  or  by writing or calling the Fund at the address
or phone number listed
on page one of this Prospectus.

 ADMINISTRATOR

 The  Manager also serves as the Fund's administrator  and
oversees all aspects
of  the  Fund's administration and operation.
Administration fees are computed
daily and paid monthly at the following annual rates of
the Fund's average
daily  net assets: 0.20% up to $250 million; 0.187%  of
the next $250 million;
0.174%  of  the  next $500 million; 0.161% of  the  next
$1 billion; 0.148% of the
next  billion;  and 0.135% of net assets  in  excess  of
$3 billion. For the fiscal
year  ended  December 31, 1994, the Fund paid
administration fees equal to 0.17%
of the value of the average daily net assets of the Fund.


DISTRIBUTOR


 PFS  is  located at 3100 Breckenridge Boulevard,  Duluth,
Georgia 30199-0001.
PFS   distributes  shares  of  the  Fund  as   a
principal underwriter and as such con-
ducts  a  continuous offering pursuant to a  "best
efforts" arrangement requiring
PFS  to take and pay for only such securities as may be
sold to the public. Pur-
suant  to  a plan of distribution adopted by the Fund
under Rule 12b-1 under the
1940  Act  (the "Plan"), PFS is paid an annual  service
fee with respect to Class
A and Class B shares of the Fund at the annual rate of
0.25% of the average
daily  net assets of the respective Class. PFS is also
paid an annual distribu-
tion  fee with respect to Class B shares at the annual
rate of 0.75% of the
average daily net assets attributable to that Class. Class
B shares that auto-
matically  convert to Class A shares eight years  after
the date of original pur-
chase  will no longer be subject to distribution  fees.
The fees are paid to PFS
which,  in turn, pays PFS Investments to pay its
Investments Representatives for
servicing shareholder accounts and, in the case of  Class
B shares, to cover
expenses  primarily intended to result in the sale of
those shares. These
expenses include: advertising expenses; the cost of
printing and mailing pro-
spectuses  to potential investors; payments to and
expenses of Investments Rep-
resentatives and other persons who provide support
services in connection with
the   distribution  of  shares;  interest  and/or
carrying charges; and indirect and
overhead costs of PFS


29


SMITH BARNEY
Appreciation Fund Inc.

DISTRIBUTOR (CONTINUED)

Investments  associated  with  the  sale  of  Fund
shares, including lease, utility,
communications and sales promotion expenses.

 The  payments  to  PFS  Investments  Representatives  for
selling shares of a Class
include a commission or fee paid by the investor or  PFS
at the time of sale and
a  continuing fee for servicing shareholder accounts for
as
long as a share-
holder  remains  a  holder of that  Class.  PFS
Investments Representatives may
receive   different  levels  of  compensation  for
selling different Classes.

 PFS  Investments may be deemed to be an  underwriter  for
purposes of the Secu-
rities Act of 1933. From time to time, PFS or its
affiliates may also pay for
certain   non-cash   sales  incentives   provided   to
PFS
Investments Representatives.
Such  incentives do not have any effect on  the  net
amount invested. In addition
to  the  reallowances  from the applicable  public
offering price described above,
PFS  may,  from  time  to  time,  pay  or  allow
additional reallowances or promotional
incentives, in the form of cash or other compensation to
PFS Investments Repre-
sentatives that sell shares of the Fund.

 Payments under the Plan are not tied exclusively  to  the
distribution and
shareholder service expenses actually incurred  by  PFS
and the payments may
exceed  distribution expenses actually incurred. The
Fund's Board of Directors
will  evaluate  the  appropriateness of  the  Plan  and
its payment terms on a con-
tinuing  basis  and in so doing will consider  all
relevant factors, including
expenses  borne by PFS, amounts received under the Plan
and proceeds of the
CDSC.

ADDITIONAL INFORMATION


 The Fund was organized as a Maryland corporation pursuant
to Articles of
Incorporation dated September 2, 1969, as amended from
time to time, and is
registered with the SEC as a diversified open-end
management investment compa-
ny.  The  Fund  offers to investors purchasing  through
PFS shares of common stock
currently  classified into two Classes, A and B. Each
Class
represents an iden-
tical  interest  in the Fund's investment  portfolio.  As
a result, the Classes
have  the  same  rights, privileges and preferences,
except with respect to: (a)
the  designation  of  each Class;  (b)  the  effect  of
the respective sales charges
for  each  Class; (c) the distribution and/or  service
fees borne by each Class
pursuant to the Plan; (d) the expenses allocable
exclusively to each Class; (e)
voting  rights  on  matters exclusively affecting  a
single Class; (f) the exchange
privilege of each

30


SMITH BARNEY
Appreciation Fund Inc.

ADDITIONAL INFORMATION (CONTINUED)

Class; and (g) the conversion feature of the Class B
shares. The Fund's Board
of  Directors  does not anticipate that there  will  be
any conflicts among the
interests  of the holders of the two Classes. The
Directors, on an ongoing
basis, will consider whether any such conflicts exists
and, if so, take appro-
priate action.

 PNC  Bank,  National  Association, located  at  17th  and
Chestnut Streets, Phila-
delphia,  Pennsylvania  19103 serves  as  custodian  of
the Fund's investments.

 The  Shareholder  Services  Group,  Inc.  is  located  at
Exchange Place, Boston,
Massachusetts  02109,  and serves  as  the  Fund's
transfer agent.

 PFS  Shareholder Services is located at 3100 Breckenridge
Blvd., Bldg. 200,
Duluth,  Georgia  30199-0062 and serves as the  Fund's
SubTransfer Agent.

 The Fund does not hold annual shareholder meetings. There
normally will be no
meeting   of  shareholders  for  the  purpose  of
electing Directors unless and until
such  time as less than a majority of the Directors
holding office have been
elected  by shareholders. The Directors will call a
meeting for any purpose upon
written request of shareholders holding at least 10% of
the Fund's outstanding
shares and the Fund will assist shareholders in calling
such a meeting as
required  by  the 1940 Act. When matters are  submitted
for shareholder vote,
shareholders of each Class will have one vote for each
full share owned and a
proportionate, fractional vote for any fractional share
held of that Class.
Generally,  shares of the Fund will be voted on a  Fund-
wide basis on all matters
except matters affecting only the interests of one Class
of shares.

 The Fund sends its shareholders a semi-annual report  and
an audited annual
report,  each  of  which includes a list of  the
investment securities held by the
Fund  at  the end of the reporting period. In an  effort
to reduce the Fund's
printing  and  mailing costs, the Fund plans to
consolidate the mailing of its
semi-annual   and   annual  reports   by   household.
This consolidation means that a
household   having  multiple  accounts  with  the
identical address of record will
receive a single copy of each report. In addition, the
Fund plans to consoli-
date  the  mailing of its Prospectuses so that a
shareholder having multiple
accounts   (i.e.,   individual,  IRA  and/or   Self-
Employed Retirement Plan accounts)
will receive a single Prospectus annually. Shareholders
who do not want this
consolidation to apply to their accounts should contact
the Fund's Sub-Transfer
Agent.


31


- ----------------------------------------------------------
- ---------------------





     Smith Barney
     Appreciation
     Fund Inc.

     3100 Breckenridge Blvd, Bldg 200
     Duluth, Georgia 30199-0062

     FDXXXX XX

Smith Barney Additional New Account Options
This Form Must be Accompanied by a New Account Application
Client Services 1-800-544-5445
1. Account Information
Owner(s) name:                Owner(s) Social Security
Number:        ___

2. Systematic Exchange
You may automatically exchange shares from certain Smith
Barney Fund for shares in another Smith Barney Fund of the
same series on a regular schedule. The accounts must have
identical registrations. Exchange must be for a minimum of
$50. You may incur an additional sales charge when moving
shares from a fund with a lower charge to a fund with a
higher charge. Please see the prospectus for details on
possible tax consequences.
Frequency (select one):    q Monthly  q Quarterly
   Beginning on Month __________ Day __________ Year
__________     Exchange into the:
                    (1-28)              (Name of fund)
     Amount to be exchanged each period:  o
$___________ or  o  Shares  ____________   Account No.:
                                   (If established)
3. Dividend and Capital Gain Distributions Option
Dividend and capital gain distributions are always
reinvested at net asset value (no sales charge) unless
otherwise indicated below. Dividend and capital gain
distributions for retirement plan accounts must be
reinvested.
I/We wish to designate my/our distribution option as
checked below:
q      Invest dividends and capital gains into (same series)
     Smith Barney Account
Number:_______________________________________
Pay cash for:
q  Dividends          q  Capital gains         q  Dividend
and
capital gain distributions
     Mail check:
     q  To me (us for joint accounts) as identified on
my/our account registration.
    q  To the payee and address indicated to the right.
                             
                             
                             
                             
4. Systematic Withdrawal Plan (SWP)
You may automatically sell shares at net asset value from
your Smith Barney account on a regular basis. You may
designate either a set dollar amount or a set number of
shares. To establish this service, your account must have
a minimum value of $5,000 or $10,000 depending on the
Fund. You may establish a SWP Distribution on a retirement
plan account only if you have obtained the age of 59 1/2
and indicated whether you elected to have 10% Federal
Income Tax withheld from your SWP Distributions. Please
call Client Services at the above toll-free number for
further information. Should you need assistance in
calculating your payment, please contact one of our
Retirement Plan Specialists at the above toll-free number.
Your SWP Distribution will start on the day indicated
below. You may choose any day between 1-28. Your check
will usually be mailed within two business days from the
date your distribution is processed, but in no event later
than three days.
Frequency (select one):
q Monthly      q Quarterly        q Semi-Annually      q
Annually
Amount to be redeemed:
q $ ___________________      or      q shares
___________________
Begin SWP Distribution on:
____________/____________/____________

(Month)            (Day 1-28)              (Year)
Payment Method - Mail SWP check:
q To me (us for joint accounts) as identified on my/our
account registration.
q To the following payee and address:
_______________________________________________________
     (Name)
_______________________________________________________
     (Name)
_______________________________________________________
     (Address)
_______________________________________________________
     (City)    (State)   (Zip)
16084     10.95

Smith Barney
Individual Retirement Account Adoption Agreement
Client Services 1-800-544-5445
Please print clearly. Mail completed application to: PFS
Investments Inc., Custodian, c/o PFS Investments Inc.,
3100 Breckinridge Blvd., Bldg 200, Duluth, GA 30199-0025.
The owner named below hereby establishes an Individual
Retirement Account ("IRA") by executing this Adoption
Agreement and herein agrees to the provisions of the
Custodial Account Agreement (make check payable to PFS
Shareholder Services).
1. Type of Account Registration
Please check the appropriate box indicating how you would
like the account registered.

o Contributory o Non-Contributory  o SEP     o SAR/SEP o
Minor IRA
Name                    Social Security Number
Birth Date
If client is a minor, please print parent or guardian
name: 2. Address

Street or P.O. Box

City, State, Zip
(________)
Daytime Telephone Number
3. Annual Custodian Fee Payment
The custodian fee is an annual fee to maintain your
retirement plan account. Your annual custodian fee will be
directly deducted from your account at the end of each
year. If you prefer to prepay this year's fee, please
check the box below and include the fee amount in the
"Total Amount Enclosed" area in Section 4. There is only
one fee assessed per person.
o Pre-pay first year $20.00 Annual Fee
4.   Investment Section
Tell us how much you want to invest and in what Fund(s).
Contribution Type

 Prior Year  IRA
Jan 1- April 15 (14)

Current Year IRA (03)

60-Day Rollover (11)

Salary Reduction
(SAR/SEP only) (35)

Prior Year Employer
Contribution (SEP Only) (31)

Current Year Employer
Contribution (SEP only) (30)

PAC AMOUNT ($50 min.)
Smith Barney Offered at A and B Pricing
Class of Share - Must Select Only One
A Shares
(front-end sales
charge)
B Shares
(contingent deferred sales
charge)
Fund Name and Number

     Growth         Investment
     Opportunity    Appreciation   Grade Bond
(700) (710)     (730)
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
     $__________________________
$__________________________   $__________________________
Total Amount Enclosed: $___________________   Total PAC
Amount: $____________    _______        Please Indicate
PAC Start Date:  Month__________Day__________
Year__________

(minimum $50 per PAC)
(1-28)
To establish a PAC, you must attach a voided check in the
space provided on the reverse side of this application.
This check must be from the bank account that you wish us
to draft. When selecting the PAC Option, your IRA
contributions will be coded as current year purchases.
Additionally, if you are establishing a SEP account, your
PAC contributions will be coded as current year employer
purchases. When executing a transfer of assets into Smith
Barney, attach a completed Transfer Form. If your transfer
represents the initial investment into this account,
please do not complete Section 4.
5. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis,
please indicate the dollar amount or percentage and the
interval that you would like between increases.
Note:  Maximum monthly amount for a contributory IRA is
$166.66 and $1,875.00 for employer contribution to a SEP.

PAC:     o Quarterly     o Semi-Annually     o Annually
Beginning on:  Month ____________ Day _____________ Year
_____________
                                                        (1
28)
Please check only 1 box below:
o Amount of Increase:    o $10.00  o $25.00  o $50.00  o
Other ____________                Percentage of Increase:
o
10% o  25% o 50%  o Other _____________
16084     10.95
6.   Primerica Life Directed Investment
If you have elected a Primerica Life/National Benefit
Life T2000 or Eagle 15 Insurance Policy and wish to
have PFS Shareholder Services begin drafting the amount
of your premium reduction in the 13th month from your
bank account, please indicate below your policy number
(if known), or the social security number of the
policyholder and the month/year you submitted the
application.
o T-2000  o Eagle-15
Primerica Life/National Benefit Life Policy Number:
_______________________________________________________
__
                                (Policy Number/Social
Security Number)

Policy Submitted    (month/year)
7. Related Account Information
Do you have other Smith Barney accounts?

o Yes     o No

If so, please indicate the account number(s) or social
security number
of the primary owner.

Acct #         Acct #

Acct #         Acct #
8. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due
to the accumulated value in any related account(s) for any
Smith Barney Fund sold through PFS Investments Inc., or if
you would like to establish a Letter of Intent to qualify
for a lower sales load, please indicate your expected
breakpoint amount. Group Plan Purchases (i.e., Payroll
Deduction Plans (PDP), 403(b)(7), SEP, SAR/SEP) are linked
for reduced sales charges.
o  New Letter of Intent
o  Existing Letter of Intent
o  Cumulative Purchases
o  Group Plan Purchases (403(b)(7), SEP, SAR/SEP, PDP)

o $25,000*     o $50,000 o $100,000     o $250,000     o
$500,000


Applicable to Class A Shares only.

  *Not Available for Letter of Intent
9. Representative Information

Representative Code #


Representative Name (Please Print)

Representative Daytime Phone # (____________)     ______

State of Sale
     (must complete only if different from client's
resident state.)
10. Beneficiary Information
In the event no Beneficiary is designated, then the
Depositor's Beneficiary shall be the spouse, followed by
Depositor's descendant's
(per stirpes including adopted children), or if neither
spouse nor any descendant is living at the time of the
Depositor's death, to the Depositor's estate.

If you desire to designate a different Beneficiary, please
complete the section below:

Beneficiary_______________________________________________
__ _______
Relationship
_______________________________________________________
Social Security Number
______________________________________________

Birth Date
11. Signature
The Undersigned certifies that he/she has full authority
and is of legal age to
purchase shares of the fund selected, has received and
read a current prospectus, the Custodial Account Agreement
(IRS form 5305-A and any attachments) and the IRA
Disclosure Statement and agrees to all their terms and
accompanying custodial fees incorporated in this brochure.
In the event that I make any rollover contributions to
this account, I hereby elect, pursuant to the requirement
of Section 1.402(a)(5)-IT of the IRS regulations, to treat
these contributions as rollover contributions. If the
account will have the PAC or Primerica Life/National
Benefit Life Directed Investment Option, that I agree to
the terms of the PAC Indemnification Agreement below. This
plan shall be deemed to have been accepted by the
Custodian upon receipt of the first transaction statement.
I also acknowledge that I determine the deductibility of
any contribution.

I authorize PFS Shareholder Services (hereafter called
"company") to initiate debit entries, electronically, by
means of check, draft or by any other commercially
acceptable method, to my checking account indicated by the
attached check, for deposit to my Smith Barney account(s)
and I authorize the depository named on the attached check
(hereafter called "depository") to debit the same to such
account. This authority is to remain in full force and
effect until company and depository have each received
written notification from me of its termination in such
time and in such manner as to afford company and
depository a reasonable opportunity to act on it. I
further agree that if any such debit be dishonored,
whether with or without cause and whether intentionally or
inadvertently, depository shall be under no liability
whatsoever, regardless of the consequences of such action.


Signature - Owner (Parent/Guardian if Owner is a Minor)
Date
Don't forget to sign this application!
X
Please attach your voided check here if you have selected
the PAC Option.

Smith Barney IRA to IRA Transfer Form
Must be Accompanied by a Smith Barney IRA Adoption
Agreement Client Services: 1-800-544-5445
Complete this form with the IRA Adoption Agreement to
transfer your IRA into a Smith Barney IRA and return to
PFS Investments Inc., 3100 Breckinridge Blvd., Bldg. 200,
Duluth, GA  30199-0025. Your present custodian may require
the completion of the following documents prior to
executing your Smith Barney IRA to IRA Transfer: Cash
Surrender Form, Original Contract, and/or Signature
Guarantee. Please contact your present custodian for
specific transfer procedures.
 1. Print your name and address here
_____________________________________________________
Name
_____________________________________________________
Address
___________________________________________________
__ City                          State     Zip
     (                )
___________________________________________________
__ Your Social Security Number   Your Daytime Phone
 2. Please tell us about your present IRA
Transfer from:  (please complete entirely)
____________________________________________________
_ Name of Resigning Trustee or Custodian
                    (                )
____________________________________________________
_ Attention              Telephone Number

____________________________________________________
_ Address of Resigning Trustee or Custodian

____________________________________________________
_ City                          State      Zip
Policy/Account Number
________________________________
 3. Please tell us how to invest your Transfer
     of Assets
o    New Account - Please attach a Smith Barney IRA
Adoption
Agreement and  a PFSI New Account Application. Please
indicate the share class, your social security number and
percentage allocated to each fund. If all transfer
proceeds are deposited into the same fund, the fund
allocation percentage should be 100%.
o    Existing Accounts - Indicate existing account number
and percentage allocated to each account. If all transfer
proceeds are to be deposited into the same account, the
fund allocation percent should be 100%.
Fund      Social Security #/  Percentage
Name      Existing Fund Account #  Allocated
     Share Class (Must Indicate)
     Select only one
Growth Opportunity (700) o A  o B  _________________
_______
Appreciation (710)  o A  o B  _________________
_______ Investment Grade Bond (730)   o A  o B
_________________ _______
               Total     100%
                    _______
 4. Please authorize your current Trustee or
     Custodian to transfer your IRA to a
     Smith Barney IRA
To Resigning Trustee or Custodian:
Please liquidate o all, or o part ($___________) of the
account listed in Section 2 and transfer the proceeds of
liquidation to my Smith Barney IRA. The estimated value
is:

$______________________.
o  immediately    o  at maturity* ____________________.
                                maturity date
* Please send us this transfer form at least two weeks
prior to maturity date but no earlier than four weeks.
 5. Signature of Client
I understand that my former Trustee or Custodian may have
a surrender charge or liquidation penalty when redeeming
my account.

_____________________________________________________
Client Signature
Date
An important note: Your Resigning Trustee or Custodian may
require your signature to be guaranteed. Please call them
for requirements.

_____________________________________________________
Name of Bank or Firm
_____________________________________________________
Signature of Officer and Title

 6. Acceptance by Successor Custodian
Please liquidate and transfer account as instructed in
Section 4.  Make check payable and send to address shown
above. This account is accepted by PFS Investments Inc.
as Custodian upon placement of authorized signatures in
the space below. Should you have any questions, please
contact our Client Services Department at 1-800-544-
5445.




(Acceptance Signatures)

_______________________________________________
Account Number (must provide on check)
16084
10.95

Smith Barney
Voluntary Account Application
Client Services 1-800-544-5445
Please print clearly, mail completed applications and make
checks payable to:
PFS Shareholder Services, 3100 Breckinridge Blvd., Bldg
200, Duluth, GA 30199-0062
1. Account Registration
Please complete this Section.
Please check the appropriate box indicating how you
would like the account registered.
o Individual or o Joint* Account


Name (First, Middle Initial, Last)


Social Security Number                      Birth


Date Joint Owner's Name


Social Security Number                      Birth
Date * Joint Tenants with Right of Survivorship
unless you specify otherwise
(    ) Joint Tenants in Common
o Gift or Transfer to Minor (UGMA/UTMA)



Custodian's Name (First, Middle Initial, Last)


Custodian's Social Security Number
Birth Date



Minor's Name (First, Middle Initial, Last)


Minor's Social Security Number
Birth
Date
o Trust
__________________________________________________________
__ __
Trustee's Name

__________________________________________________________
__ __
Name of Trust Agreement
__________________________________
___________________
Taxpayer Identification Number
Date of Trust
o Other Registration
            (i.e. corporation, non-profit, partnership,
sole proprietorship, etc.)
__________________________________________________________
__ ___________
Registration
__________________________________________________________
__ ___________
Registration
____________________________________
______________________________
Taxpayer Identification Number
Type of Organization
2. Address and Citizenship
We'll need to know this info!
__________________________________________________________
__ ___________
Street or P.O. Box
__________________________________________________________
__ ___________
City, State, Zip
(_____________)___________________________________________
__ ____
Daytime Telephone Number
o U.S. Citizen       oNon-Resident
Alien___________________________________
                                           Specify Country
o Resident Alien
3.   Investment Section
Tell us how much you want to invest, in what share
class... and in what fund(s).
Smith Barney                   Offered at A and B Share
Pricing
o A Share
       (front-end sales
        charge)
o B Share
      (contingent deferred sales
       charge
          PAC Draft Amount
     Amount Enclosed     ($50 min per PAC)
Fund Name and Number:
Growth Opportunity (700) $         $
Appreciation (710)  $         $ Investment Grade
Bond (730)   $         $
Total Amount Enclosed $  ________________________
Total PAC Amount ($50 min. per pac)
$_________________________________
Please indicate PAC start date:
Month_____________
Day________ Year_________
     (1-28)
To establish a PAC, you must attach a voided check from
the bank account that you wish us to draft in the space
provided on the reverse side of this application. All
Dividends and Capital Gains will be reinvested unless
otherwise indicated on the "Additional New Account
Options" form contained in the
prospectus.
4. PAC Automatic Increase Option
If you would like to increase your PAC on a regular basis,
please indicate the dollar amount or percentage and the
interval that you would like between increases.
Please increase my PAC:  o Quarterly    o Semi-Annually
o Annually

Beginning on:  Month _____________ Day ____________ Year
_____________
                                  (1-28)
Please check only 1 box below:
Amount of Increase:      o$10.00   o$25.00   o$50.00
oOther________
Percentage of Increase:  o10% o25% o50% oOther________
5. Primerica Life Directed Investment
Tell us about your Primerica Life/National Benefit Life
Product.
If you have elected a Primerica Life/National Benefit Life
T2000 or Eagle 15 Insurance Policy and wish to have PFS
Shareholder Services begin drafting the amount of your
premium reduction in the 13th month from your bank account,
please indicate below your policy number (if known) or the
social security number of the policyholder and the
month/year you submitted your insurance application.
o T-2000                         o Eagle 15
Primerica Life/National Benefit Life Policy Number:
_________________________________________________________
                               Policy Number/Social
                               Security
Number

Policy Submitted:
     Month/Year
16084
                           10.95
6. Related Account Information
Do you have other Smith Barney Accounts?
o Yes o No

If so, please indicate the account number(s) or social
security number of the primary owner.

Acct #         Acct #

Acct #         Acct #

7. Letter of Intent/Reduced Sales Charge
If this purchase qualifies for a reduced sales charge due
to the accumulated value in any related account(s) for any
Smith Barney Fund, or if you would like to establish a
Letter of Intent to qualify for a lower sales load, please
check the appropriate box and indicate your expected
breakpoint amount. Group Plan Purchases (i.e., Payroll
Deduction Plans, PDP) are linked for reduced sales charge.

o  New Letter of Intent  o  Cumulative Purchases

o  Existing Letter of Intent  o  Group Plan Purchases
(PDP) o $25,000*     o $50,000 o $100,000     o $250,000
o $500,000
Applicable to Class A Shares only.
*Not available for Letter of Intent.
8. Representative Information

Representative Code #

Representative Name (First, Middle Initial, Last)

Representative Daytime Phone # (_____________)


State of Sale
                             (Must complete only
if different from client's resident state.)
9. Signature and PAC Authorization
By my/our signature below, I/we certify, under penalties
of perjury, that the social security or taxpayer
identification number provided in Section 1 is correct,
that I am not subject to nor has the IRS notified me that
I am subject to backup withholding, that I have been given
a current prospectus, and if the account will have the PAC
or Primerica Life/National Benefit Life Directed
Investment Option, that I agree to the terms of the PAC
Indemnification Agreement below.

I/we authorize PFS Shareholder Services (hereafter called
"company") to initiate debit entries, electronically, by
means of check, draft or by any other commercially
acceptable method, to my (our) checking account indicated
by the attached check, for deposit to my Smith Barney
account(s) and I authorize the depository named on the
attached check (hereafter called "depository") to debit
the same to such account. This authority is to remain in
full force and effect until company and depository have
each received written notification from me (or either of
us) of its termination in such time and in such manner as
to afford company and depository a reasonable opportunity
to act on it. I further agree that if any such debit be
dishonored, whether with or without cause and whether
intentionally or inadvertently, depository shall be under
no liability whatsoever, regardless of the consequences of
such action.





Signature - Owner or Custodian     Date


Signature - Joint Owner  Date
Please attach your voided check here if you have selected
the PAC Option.
Don't forget to sign this application!